Berkshire Hathaway’s announcement it will launch a share buyback program is a “landmark announcement,” Alice Schroeder, author of "The Snowball: Warren Buffett and the Business of Life" and a former insurance equity analyst, told CNBC Monday.
“It should be taken seriously because it’s a new sign that [Warren Buffett] is acknowledging that he’s not going to be [at Berkshire] forever, and that he’s letting go of the reins a bit,” Schroeder said.
Berkshire said it was now willing to pay up to 10 percent more than book value for the stock.
Berkshire Hathaway Class A shares rose 3.7 percent on the news of the planned buybacks, while the more actively traded Class B stock rose 4.4 percent. Last week, both classes fell to their lowest point since early 2010.
Schroeder said it is interesting Berkshire Hathaway is going to buy back both the Class A shares and the Class B shares. “Over time the As are converting into Bs. This gives them a choice of what to do … The Bs are the ones that are owned by the indexers.”
Also, she noted Berkshire has given some subtle hints of how it is gradually transitioning, including the possibility “Buffett might give up the CEO role before he gives up the chairmanship."
“I think what he wants to be remembered for his opinions and his leadership. He’s obviously got an incredible investing track record, but he gets more visible it seems almost by the week,” concluded Schroeder.
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